1 week ago
Global Bond Selloff Pushes US Treasury Yields Higher
Bond prices and bond yields move in opposite directions.
When many investors sell bonds, their prices fall and their yields rise.
Investors are selling because they think interest rates may stay high for longer.
High oil prices are making inflation harder to control, which limits the Federal Reserve’s ability to cut rates.
The United States is also borrowing more money and spending more to service its debt.
That can make investors demand higher returns for buying government bonds.
Japanese investors might prefer domestic bonds if returns in Japan improve.
Some central banks are also holding more gold instead of US Treasuries, which could further weaken demand.
The 30-year US Treasury yield reached 5.33%, its highest level since 2002, while the 10-year yield rose above 4.7%.
Investors are selling existing bonds as expectations for higher interest rates make older, lower-coupon bonds less attractive.
High oil prices linked to the US-Iran conflict and Strait of Hormuz blockage are adding to inflationary pressure.
A widening US fiscal deficit, rising national debt and debt-servicing costs are increasing concerns about government borrowing.
Potential Japanese Treasury sales and central-bank diversification toward gold could reduce demand for US debt.
- Who
- Global bond investors, the Federal Reserve, the US government, Japanese investors and central banks are involved.
- What
- US Treasury yields have risen as bond prices fall amid a global bond selloff.
- Where
- The pressure is centered on US Treasuries but has spread across bond markets in the UK, France, Italy, Germany, Japan and other major economies.
- When
- The increases were reported this week, with the 10-year yield later falling to 4.65% on Wednesday after reaching 4.75% in the prior session.
- Why
- Higher oil prices, persistent inflation concerns, expectations of higher-for-longer interest rates, growing US deficits and possible foreign diversification away from Treasuries are driving the move.
Key facts
- 30-year Treasury yield
- Reached 5.33%, its highest level since 2002.
- 20-year Treasury yield
- Reached a post-2006 high.
- 10-year Treasury yield
- Rose above 4.7% and later decreased to 4.65% after reaching 4.75%.
- US fiscal deficit
- The government spent $1.80 trillion more than it collected year-to-date in fiscal year 2026.
- July deficit
- The US fiscal deficit reached $432.3 billion, the highest monthly total since March 2021.
- Debt-servicing cost
- Debt service cost $1.17 trillion as of July 2026, equal to 19% of fiscal-year federal spending.
- Central-bank reserves
- Gold accounted for 27% of official foreign reserves at the end of 2025, compared with 22% for US Treasuries and 15% for the euro.
Quotes
Nigel Green
CEO, deVere Group, financial analyst
“"Every dollar added to the oil price makes the inflation argument harder for the Federal Reserve and easier for the bond vigilantes."”
financialexpress.com
“"A government paying more than $1 trillion a year just to service debt… investors are pricing the risk that it doesn’t."”
financialexpress.com
Sources
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